201 S. Anaheim Blvd.
Tenth Floor
Anaheim,
CA 92805
Tel: (714) 765-4300
Fax: (714) 765-4630
www.anaheim.net
City of Anaheim
HOUSING & COMMUNITY DEVELOPMENT
DEPARTMENT
DATE: APRIL 18, 2023
FROM: HOUSING
& COMMUNITY DEVELOPMENT DEPARTMENT
SUBJECT: APPROVE A COOPERATION AGREEMENT FOR THE NORTH
HARBOR ANAHEIM PERMANENT SUPPORTIVE HOUSING
PROJECT PREVIOUSLY KNOWN AS THE STUDIO 6 MOTEL
INTERIM HOUSING PROJECT
ATTACHMENT (Y/N): YES ITEM # 22
GOVERNMENT CODE
§ 84308 APPLIES: YES
RECOMMENDATION:
That the City Council, by Motion, approve a Cooperation Agreement, substantially in the form attached hereto, by and between the City of Anaheim and the Anaheim Housing Authority, for the North Harbor Anaheim Permanent Supportive Housing Project formerly known as Studio 6 Motel, located at 1251 North Harbor Boulevard for the rehabilitation and conversion of the existing interim housing project; authorize the Director of Housing & Community Development to execute and administer the agreement; and authorize de minimis changes that do not substantially change the terms and conditions of the Cooperation Agreement, as determined by the City Attorney.
BACKGROUND:
In December 2021, the California Department of Housing and Community Development (State HCD) released a Notice of Funding Availability for the Homekey Program. On January 25, 2022, the Anaheim (City) City Council and the Anaheim Housing Authority (Authority) approved the submission of an application for Homekey Program Round 2 funds in partnership with Linc Housing Corporation (Developer) and the project’s supportive services provider, American Family Housing USA, a California non-profit corporation for the acquisition and rehabilitation of the 119-room Studio 6 Motel built on 1.47 acres located at 1251 N. Harbor Boulevard. The Homekey Program provides funding to support the acquisition and occupancy of hotels, motels, and other existing structures to support the expedient delivery of affordable housing for persons experiencing homelessness.
On March 28, 2022, the City and the Developer were awarded $26,537,559 to acquire
and operate the Studio 6 Motel as interim housing (Phase I). This initial phase involved the rehabilitation of 89 units for the purposes of interim housing as required by Homekey funding guidelines. The 89 units were in fair condition and ready for occupancy after minor repairs except for units that required renovation to meet the Homekey accessibility and hearing/visual requirements. Additional improvements
CITY COUNCIL AGENDA REPORT
Preliminary Funding Award Letter and Cooperation Agreement for Linc Housing Corporation April 18, 2023
included updated lighting, increased security measures, kitchen area, and minor improvements of the amenity space. The Homekey Program guidelines required a local match to pay for capital and operational costs; therefore, the City provided a loan from the Authority’s Low and Moderate Income Housing Asset Fund (LMIHAF) to the developer in the amount of $2,877,959 for capital improvements, and the City provided a Homeless Housing and Assistance Program (HHAP) funds grant in the amount of $3,593,634 to cover a portion of the required $7.5 million for operational services. The remaining operational services balance of $3,929,648 was provided by the County of Orange, in a show of support for the Homekey project. The Phase I Interim Project was successfully occupied by November 2022.
DISCUSSION:
The Project is now in the process of transitioning to permanent supportive housing (Phase II). It was anticipated that when the City and Developer submitted an application for Homekey Program funds, the project would quickly transition from interim housing to permanent supportive housing. The intention of the Homekey Program is to expediently house persons experiencing homelessness; however, the ultimate goal of the Homekey Program is to increase the supply of Permanent Supportive Housing (PSH) throughout the state. Phase II will involve the rehabilitation and conversion of the existing interim housing project, formerly known as the Studio 6 Motel, to an 87-unit affordable PSH Project with an additional two, 2-bedroom manager units. The proposed improvements will involve the full and complete rehabilitation of the building with new Spanish Mediterranean architectural façade elements, new unit interiors, new amenities to include a large outdoor courtyard, a community room, art features, an edible community garden, and designated pet play area. The Phase II Project unit mix will include 67 studio units, 20 one-bedroom units, and two one-bedroom manager units.
The Developer proposes to finance the
Project with a combination of funding sources
including $21,160,861 from the Tax Credit Allocation Committee and $3,854,000 from a private lender. The Developer will submit an application for 9% Tax Credits in April 2023, and if awarded, would be notified of the award by July 2023. If the Project is successful in obtaining its funding, construction will begin in January 2024. Although, the goal of both the City and Developer is to receive a Tax Credit allocation for Phase II, if unsuccessful, the Project will continue to operate as interim housing until all funding sources can be identified. The majority of the funding needed to complete the Project is being sought from varying State resources; however, a financial gap still exists. As a result, the Developer has requested that the City provide a loan of up to $4,900,649 million funded in whole or in part from HOME-American Rescue Plan (HOME-ARP) program funds, Housing Opportunities for Persons with Aids (HOPWA) funds or LMIHAF funds. The inclusion of local funding sources as part of the financing structure increases the likelihood that State funds will be awarded to the Project. The total development cost for the Project is $59,331,128. The Phase I Interim Project occupants will be given priority in obtaining housing in the Phase II PSH Project. During the rehabilitation period, occupants will be relocated to the Center of Hope PSH project and/or to other motels until the project rehabilitation is completed.
The Developer is
also requesting an allocation of 87 Section 8 Project-Based Vouchers (PBV) for the Project. The PBV program is a component of the Section 8 Housing Choice Voucher (HCVP) program. The PBV component is distinguished from the Preliminary Funding Award Letter and Cooperation Agreement for Linc Housing Corporation April 18, 2023
tenant-based program in that rental subsidies are attached to the rental units and families who reside in the designated units receive the benefit of such assistance. The 87 PBV units will be made available to families and/or individuals exiting homelessness.
The Developer and Authority staff conducted a community outreach meeting to discuss the Project on January 19, 2022, and the Project was well received by the community. A second community outreach meeting was held virtually on March 30, 2023, to provide a project update. In advance of the meeting, a notice was mailed to all residents and businesses within a 600 ft. radius of the Project site; however, staff did not receive any comments from the community and no individuals were present at the meeting. Staff is supportive of the Project and recommends approval of the Cooperation Agreement by and between the City and the Authority to transfer up to $4,900,649 in whole or in part from federal HOME-ARP and HOPWA funds from the City to the Authority, so the Authority can loan such funds to the Developer for the Project. Additionally, the Authority, in a separate agenda item, will also be considering a Preliminary Funding Award Letter, which outlines the terms and conditions of the Authority’s provision of assistance to the Developer related to the Project. The Housing and Community Development Commission reviewed this request at its meeting on April 5, 2023 and recommended approval.
Pursuant to Assembly Bill (AB) 140 (2021), the proposed Project is categorically
exempt from the California Environmental Quality Act (CEQA) (Health & Safety Code, § 50675.1.4.). AB 140 was established to help streamline the development process for projects that were awarded Homekey funds to rapidly expand housing for homeless individuals. Additionally, AB 140 provides significant land-use streamlining for Homekey Round 2 projects and are “deemed consistent and in conformity with any applicable local plan, standard, or requirement, and any applicable coastal plan, local or otherwise, and allowed as a permitted use, within the zone in which the structure is located, and shall not be subject to a conditional use permit, discretionary permit, or any other discretionary reviews or approvals.” (Health & Safety Code, § 50675.1.3, subd. (h).) This land use “exemption” is independent of the CEQA exemption and applies to all Homekey Round 2 funded projects including projects that transition into permanent supportive housing.
IMPACT ON BUDGET:
All proposed assistance to the Project is derived from restricted funds provided by HUD and Low Moderate Income Housing Asset Funds in the Housing & Community Development Department’s FY 2022/23 budget.
Respectfully submitted,
Grace Ruiz-Stepter
Housing & Community Development Director
Attachment:
1. Cooperation Agreement